Negative income tax extended to 55,000 more Israelis

The proposal by Minister of Finance Moshe Kahlon was approved by the government on Sunday.

The government approved Sunday an initiative by Minister of Finance Moshe Kahlon to expand negative income tax to 55,000 additional beneficiaries – single parent families and self-employed workers – at a cost of NIS 130 million.

The approved plan widens the range of average monthly income which is eligible for the grant. A single parent with up to two children will receive the benefit if earning between NIS 1,270 and NIS 9,420 (instead of the previous range of NIS 2,060-6,220) while a single working parent with three or more children will be eligible for the grant if they earn between NIS 1,270 and NIS 11,500 (instead of the previous range of NIS 2,060-6,820).

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For self-employed workers, the initiative proposes setting the eligibility requirements at the same thresholds as contract workers. Under the current system, self-employed workers receive the benefit over four years; in the fifth year, the balance left after write-offs in previous years is transferred with a 25% deduction.

The memorandum for the proposed legislation also included an amendment to correct a part of the existing legislation regarding minimum-wage employees, who will be eligible for negative income tax even if they do not have children or have passed the age of 55 in the current tax year.